Finance Can Save the Planet. It Just Needs Better Data.

There’s an old joke where a tourist asks a local how to get to a scenic landmark. “Well, I wouldn’t start from here,” the resident tells the traveler. Asset managers face a similar challenge when it comes to meeting their climate responsibilities. They’re starting from a suboptimal place. But I’m optimistic that the data they rely on can improve dramatically, providing a more informed environment in which to make investment decisions without straying into greenwashing.

Shareholders have punished the stock prices of European fund management firms in recent months amid concern they’ll be found to have overstated the climate-friendly credibility of their products, Bloomberg News reported this week. The wariness comes after Germany’s DWS Group GmbH came under scrutiny from regulators inquiring into its use of environmental, social and governance marketing.